Private LPG: Are you paying the right price, or are you getting cheated?

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How much are you paying for your LPG cylinder? Pic: Meera K

Akankshit Kanungo, a resident of BTM Layout in Bengaluru, is a customer of Indane gas agency. He has a private LPG provider, Jyothi Gas, as a back up. The reason: Indane is not providing good service. Bills were not provided, refills were not delivered. There were mysterious bookings in his account, that never delivered any gas to his address. Unable to get refills when he wanted, he went for Jyothi Gas.

He pays around Rs 850-950 including delivery charges, which varies every time. He is not connected to anyone else who uses Jyothi Gas, so he doesn’t know whether the price he pays is fair. However, he is not unhappy.

“To be honest, I feel even if it is overpriced, it appears to be convenient for people who do not get good service from other LPG retailers… I could not have gone hungry following up with the Indane folks on and on without a positive resolution. I guess the premium charged seems to be fine if I get a cylinder within 30 minutes of booking,” he says.

He doesn’t know exactly how many kgs the cylinder is. His Jyothi Gas dealer does not provide a bill for their deliveries. If he needs one, Akankshit needs to go to the outlet and then ask for it.

This is the case with most people starved for time, who cannot wait for service providers to help in their own sweet time. So the private LPG business flourishes, especially on the outskirts of the city, and among apartment dwellers. And it looks like the private LPG industry is trying to make the most of it, by selling LPG for unfair price.

Cheating on pricing

Those who buy private gas have a different experience. Many pay as high as Rs 1,400 for a 12 kg cylinder. Meera, a resident of Bellandur, is one of the customers who was overcharged, but never realised it for a long time.

One fine day last year, she realised that the cost of gas seemed too high, and called the customer care of Jyothi Gas to ask the price. She was told that the price was Rs 830 for a 12 kg cylinder that day. She wrote to Jyothi Gas explaining the situation and demanding an explanation. “I have been paying Rs 1,080 (+Rs 20 delivery charge) for a long time now – to your dealer, Ansul Gas agency,” she said in her mail.

Meera checked with her neighbours, and realised many were paying the jacked up price.

After many such mails and a few calls later, Jyothi Gas assured her they would refer another dealer. Another dealer was referred, but she never got the promised LPG cylinder delivery. She contacted the company again, and was told the MRP of a LPG cylinder was Rs 740 on that day, and a dealer would be provided to sell the gas at the lowest possible price.

Finally, a gas agency delivered a cylinder to her house, but charged Rs 1,180. When she questioned it, the delivery man changed the price.

(Left) A LPG bill from a dealer in Outer Ring Road. Pic: Meera K
(Right) The price written in the bill was Rs 1,050 and was modified to Rs 740 when the customer raised an issue. Pic: Meera K

Meera asked Jyothi Gas for the agreement with their dealers, the maximum retail price of a cylinder. She asked him why the latest price was not available on the website and social media pages. She has received no reply from Jyothi Gas as on date.

“Many residents are unaware of the correct price because the private gas companies like Jyothi Gas or Total do not publish the correct prices on their website, and consumers often end up getting cheated,” she explains. “Even now, they sometimes put the higher rate and change the bill amount when I point it out.”

The site consumercomplaints.in has many complaints related to overcharging of gas cylinders, saying dealers are charging upto Rs 1,300 for a 12 kg cylinder. One commenter, P Rao says he was charged Rs 900, with Rs 100 for delivery. Another commenter, Muthuselvan Pandurangan says he was charged Rs 1,280! They have also uploaded the bills with the high amounts as proof.

LPG by design has many price bands.

Subsidised gas from a public service provider, where you have to pay the full price + delivery charge, and the subsidy comes back to your account

Non-subsidised gas by a public service provider, which costs the full amount + delivery charge, with no subsidy coming back to the account

Domestic connections by private LPG providers

Commercial connections by private LPG providers

Commercial connections by public LPG providers

Here is the price range for February 24th 2016.

Gas company

Price on February 24th 2016

Per kg

Domestic/ Commercial

Bharat Gas, HP and Indane

14 kg – Rs 586

19 kg – Rs 1,160

Rs 41.8

Rs 61

Jyothi Gas

12 kg – Rs 800 + Rs 20 delivery charge

17 kg – Rs 1,350 + 20 Rs delivery charge

Rs 66.67

Rs 79.41

Totalgaz

12 kg – Rs 650

17 kg – Rs 1,038

No consistent price among private agencies

If you feel you have been overcharged for the LPG that you buy, recount your experience over email, with relevant pictures of the bill. If you have reached out to your gas agency for clarification, do let us know what they have said as well.

Click here to mail us. A copy of this mail will also be sent to officials in the Petroleum and Natural Gas Ministry.

When Citizen Matters called up Srivari agency, listed on Justdial as a Totalgaz dealer, Srinivas who picked the call said he was a Jyothi Gas dealer. He said the 12 kg cylinder costs Rs 1,100 and 17 kg cylinder, Rs 1,400. When we stressed that the cost of Jyothi Gas was actually Rs 800 and asked why he was overcharging, he said he could supply the cylinder at Rs 950 minimum. “Agar 850 mein mile, to ussi se le lo madam (If you get it for Rs 850 from others, take it from them only, madam),” he told us.

When we called up another agency in Koramangala dealing with Totalgaz, Ankur Goel who picked the call said a 12 kg cylinder cost Rs 650, while a 17 kg cylinder was priced at Rs 1,038. When we asked why another agency was putting the price at Rs 800 for a 12 kg cylinder, he said they were overcharging.

The difference in LPG rates between PSU and private firms

Per kilo cost of LPG when bought from one of the state-owned companies is around 42 rupees, and that by private companies is Rs. 66. What is the reason for this significant difference in price of 24 rupees per kilo?

As per the central excise and customs tariff table on the petroleum planning website, a basic custom duty of 5%, additional customs duty of 8% and another 8% of basic covenant duty is applicable on LPG imported for the purpose of selling it for commercial (or non-domestic) use. But none of this is applicable on LPG imported for sale for domestic use.

However, this distinction between import for domestic and non-domestic use does not apply to private companies, as Dr. Bhamy Shenoy, a petroleum product price expert, told Citizen Matters. Private companies have to pay all these taxes on all the LPG imported, regardless of whether it will be sold for domestic or commercial use, he said.

As a result, state-owned companies like HP, Indane and Bharat gas, which are exempted from these taxes on the LPG imported for sale for domestic use, can sell a cooking LPG cylinder at a much lower cost than private companies.

So what are the charges involved in the price of private gas? The price of the gas plus 1% VAT is the price of the cylinder hat Total gas sells, says Ankur Goel, owner of Gomati gas agency in Koramangala. The 17 kg commercial cylinders have 14.5% VAT attached to the gas price. Since Total gas is a multinational they are able to supply at a lower cost than other private distributors, he says.

Since the state-owned and private companies have to pay the same taxes on LPG imported for sale for commercial use, theoretically there is no price difference in the per-kilo cost of LPG cylinders sold for commercial use. This is also evident from the above table, where the per kilo cost of the private gas and state-owned gas is the same for commercial cylinders.

However, this does not justify the outrageous price the dealers are charging the consumers, while official price stays within Rs 45 per kilo at the most. People are overcharged all over India, and have been venting in consumer complaint foras.

How to pin the dealer who overcharges?

Ankur Goel, owner of Gomati Total gas distributors from Koramangala, says that the price depends upon the international market. Two months ago in December 2015, Total gas cost Rs 580 per 12 kg cylinder, but last month jumped into Rs 710, and this month came down to Rs 650. Ideally there should not be much of a price difference between the non-subsidised cylinder from the state-owned companies like HP or Indane, and between the private suppliers, but each private gas distributor is free to set own price bands, he adds.

How to stop agencies from overcharging? Total Gas has systems like placing MRP stickers on the cylinders with helpline numbers, and calling distributors from unknown numbers to check whether the distributor is overcharging. A distributor is supposed to handle one brand of private gas at a time according to terms and conditions, but some people choose to keep multiple brands, to earn more.

Ankur explains that there is no governmental regulation on private gas distributors, but the gas agencies can take action against the distributor on complaints from customers. In such a case, it is very difficult to pin the responsibility of overcharging. Customers don’t know whether it is a dealer or a distributor, when they reach out to persons selling private gas, and yield to whatever price mentioned by them.

If people can call the gas company and check the rate for the day or the month, they will be able to counter if the person who is supplying gas is overcharging them. A complaint with a phone numbers or email ids of the original agencies should solve the problem.

You might to getting cheated by your private LPG dealer. Here’s how you can make sure you are not being overcharged. Read about an alternative school where students are teaching themselves. How was Bengaluru before the BDA came along? All this and more…

3 Comments

The other part of the story is how the dealers cheat customers on the deposit amounts. I was charged Rs.1990 for a new connection while the Jyothi gas company website indicates Rs.1800. Now when I want to surrender my connection, I’m told I’ll only get back Rs. 400, while my subscription voucher shows Rs. 800 as the cost of cylinder (of which Rs. 400 is refundable) and the remaining amount of (Rs.1190) presumably as deposit which is not being refunded by the dealer !

Oh…here I was fighting over the regular gas cylinders not being provided at a discount without illogical documentation being mandated…and I never knew about this grey area at all! Thanks for exposing this racket, Meera.

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